Analysts at Nomura and Brown Brothers Harriman have issued research indicating the euro is positioned to strengthen against the US dollar, British pound, and Japanese yen. The views, published on 21 August 2026, point to diverging central bank paths and incoming economic data as the primary drivers.
Nomura strategists said the euro’s expected outperformance is underpinned by a more hawkish European Central Bank stance relative to the Federal Reserve and Bank of Japan. While the Fed has signaled potential rate cuts and the BoJ remains committed to ultra-loose policy, the ECB has kept a cautious tone with rates higher for longer to combat persistent inflation. This interest-rate differential is seen as a key support for the single currency, especially against the yen and the UK pound, where political uncertainty and economic headwinds remain.
Separately, BBH analysts highlighted stronger-than-expected Eurozone purchasing managers’ index data as another pillar of support for the euro. The PMI resilience suggests the region’s private sector is holding up better than feared, reducing pressure on the ECB to turn dovish. Meanwhile, the US dollar has faced headwinds from softer economic indicators and rising market expectations that the Federal Reserve may pause or cut rates later this year.
For traders, the outlook implies potential opportunities in EUR/USD, EUR/GBP, and EUR/JPY pairs, but both firms caution that currency forecasts remain uncertain and will depend on upcoming data and central bank communications. A stronger euro could also create mixed effects for European exporters by making goods more expensive abroad while lowering import costs and helping to ease inflation.
